The net asset value which we know NAV of the fund is the aggregate market value of the assets fund net of its liabilities. if we describe in word then that means the fund is ended or converted, by selling off all the assets in the fund, this is the aggregate value that the shareholders would collectively own. This gives growth to the perception of net asset value per unit, which mean the value, represented by the owner of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. However, most of the shareholder refer to the ‘NAV per unit ‘as ‘NAV’, ignoring the “per unit”.

Calculation of Net Asset Value

The essential part of the calculation or formula is the valuation of the assets owned by the fund. After it is calculated, The NAV is simply the net value of assets divided by the number of units outstanding. Asset value is equal to Sum of the market value of shares/debentures Liquid assets/cash held if any Dividends/interest accrued – Current liabilities – Expenses accrued but not paid.

NAV = Asset value of the fund
No. of units outstanding

Load

Some asset management companies (AMCs) levy service charges for allow’ g subscribers entry into or exit from mutual fund schemes. The service charge is termed as entry/exit load and such schemes are called “load” scheme With the vibrancy of capital markets in India and the returns available in these markets, it was natural that more and more people wanted to enter these markets. However, during the bad times in stock markets, the small investors did suffer heavy losses, mainly because of their lack of knowledge ahoy the working of these markets. These investors also are unable to spread the risks across securities and are carried away by market gossip, rather than the knowledge that is essential to make investments in these markets. The mutual funds are the natural answer to many of these problems. It is thought to be much better for the investors to invest in capital markets, through the mutual funds. Professional portfolio managers. who can spread the risks inherent in these investments, manage the mutual funds? The small investors thus get to invest their money in many companies as, members of the funds, something they are unable to do, due to their limited resources.

Until 1987, UTI was the only mutual fund in India. This was the year when public sector banks’ subsidiaries were allowed to start the mutual funds, followed by the state-run insurance companies. The early entrants in this field were led by State bank, Canara Bank, Bank of India and Life Insurance Corporation and General Insurance Corporation. Mutual funds sponsored by the private sector, other public, corporates and financial institutions in association with fund managers and foreign investment and foreign institutional investors emerged on the exhibition.

SEBI defined Mutual funds by its regulations as funds landed in the form of a trust to raise money through the sale of units to the unitholders who is interested in a scheme, which consists of par unit serving one undivided share in the assets of a scheme-to public under one and more scheme for investing in securities including money market instruments consisting of commercial bills, commercial papers, etc. According to the regulation laid down by SEBI, mutual funds have to be registered with SEBI. The application for registration together with a non-refundable fee should be made in the prescribed form.

The mutual fund can be constituted in the form of a trust and the instrument of the organization should be in the form of a deed, duly registered under the Indian Registration act invest, produced by the supporter in favor of the trustees named in the instrument. Trustees mean the Trustee Company or Board of trustees the who hold the property of the mutual fund in trust for the benefit of the unitholder.

Systematic Investment Plan (SIP)

Systematic Investment Plan works like a monthly investment. It is your fixed deposit account where you can invest small money every month. You can invest in mutual funds in the small portion of your saving in place of heavy investment, for example, you minimum amount should invest 5000 in mutual funds and through SIP you can invest 10 times 500rs in place 5000rs amount.